Nonprofit Leadership Solutions: Outside Service Providers

Nonprofit organizations are often reliant on individual donors, federal grants, and other monies not generated internally. This scarcity of funds, along with outside involvement in the organization results in unique needs not typically experienced by for-profit businesses. Not only do nonprofits have to work within characteristically low budgets, but they need to prove their efficacy and mission accomplishments to funders.

In an effort to accomplish these tasks, as well as improve service to consumers, nonprofits are turning to outside service providers more and more. In the post below, we review the benefits nonprofits are seeing, as well as what to look out for when working with external providers.

Outsourcing in Nonprofit Organizations

As was defined in our previous post, Why Outsourcing May Be Right for Your Organization and 4 Tips for Success, outsourcing occurs when a company or organization hires an outside service provider to complete a specific project, or work for a determined amount of time. The relationship is sealed with a mutually agreed upon contract outlining expectations, responsibilities, and terms of service for both parties.

Nonprofit outsourcing is a little different from the common understanding of outsourcing used in the business sector because their main objective is to save money. In most nonprofits, the key objective to utilizing an outside service provider is to improve the effectiveness of the nonprofit. The focus of a nonprofit is typically centered on accomplishing the directives of their mission efficiently and effectively for the benefit of consumers.

Now, that is not to say that nonprofits are not financially focused. As was mentioned above, nonprofits are often reliant on outside financiers to fund their mission. However, by reducing costs, improving employee resources, tapping industry expertise, and increasing the focus on mission accomplishment, nonprofits can actually gain more of the necessary funds they depend on. And that’s why so many nonprofit organizations are turning to outside service providers...

How Nonprofits are Benefiting from Outside Service Providers

#1 Proof of efficiency and results.

Individual donors, grant providers, and public and private foundations must be diligent in determining where they spend funds. It is the nonprofits’ job to prove their concept and results in order to continue receiving what they need to be successful in meeting their missions.

Service providers are a huge help in this area because it is their responsibility to prove their own effectiveness to the nonprofit in order to maintain their contract. Because that burden is put on the service provider, it is easy for nonprofits to use those results in response to donors.

For example, if a nonprofit needed to increase the skills and knowledge of their employees to meet required state or federal guidelines, or if it needed infrastructure support for a new stakeholder training, an e-learning service provider could be contracted to provide that curriculum. The e-learning provider must first prove to the nonprofit that their curriculum is achieving the agreed upon outcomes. Then, the results, assuming they’re positive, would be used to showcase the nonprofit's’ ability to meet the required standards and stakeholder needs.

When donors see that their funds are being well-spent, objectives are being met, and efficiency and effectiveness are accomplished, they are inclined to continue funding the nonprofit, or even increase funds. It’s these tangible, data-based results that will continue to fund nonprofits.

#2 Access to industry expertise.

Unfortunately, nonprofit organizations are not generally known for high paying salaries or providing a wide array of employee benefits. Again, the reliance on outside funding and strict budgets require that nonprofit organizations are highly focused on accomplishing their missions. This dynamic can sometimes result in a lack of expertise in organizational development and operational areas like curriculum development, human resources, and information technology.

Outside service providers however, can provide these niche services without taking away from mission-focused activities. For instance, using the same examples above, if employees require additional training, or if there was a need to provide an engaging stakeholder training, a curriculum development company could quickly, easily, and efficiently provide such e-learning solutions.

Rather than attempt a solution using the resources available -- which can detract from the mission of the organization, reduce employee focus on the jobs they were hired for, lose time in research and development, and possibly result in a less-than-useful solutions -- allow a proven expert to get the job done right the first time. Donors understand the use of outside providers and will most likely see the additional help as a positive move by the nonprofit. It’s necessary for organizational leaders to know both what the staff and organization are capable of, as well as what they are not.

Often times, when a nonprofit does attempt to implement new innovations using in-house personnel it requires so much time, money, and focus that the result is choosing to hire outside services anyway. Donors may see this trial and error as a negative reflection on the organization’s ability to self-identify shortcomings while being inefficient with its resources.

Get Insights, if Not Help, from the Experts

It never hurts to start a discussion with providers to find out what resources are available. You may be surprised at just how much your organization can accomplish with a little help. After you receive information, formulate a plan for implementation, and forecast results. Donors and board members can then make an educated decision to get behind the provider or suggest adjustments for maximum efficacy within budget.

These two main reasons for nonprofit outsourcing carry a variety of additional benefits including…

  • Increased focus on mission-related activities and results.
  • Reduced costs related to employee time and effort, failed attempts at a solution, and lack of expertise and understanding.
  • Decline in employee turnover.
  • Decreased staff and/or board time spent on outsourced function.
  • Improved operational efficiency and organizational performance.
  • Expanded access to insights and metrics related to outsourced function.
  • The benefits of hiring an outside service provider for a task that cannot be done quickly and efficiently in-house will usually result in most, if not all of these benefits to your nonprofit organization. With that said, it is imperative that nonprofits choose the right provider for their mission and the results they hope to achieve.

    Choosing the Right Service Provider for Your Nonprofit

    There are A LOT of service providers for nonprofits to choose from and that can feel overwhelming. Here are some things to remember and look for when vetting possible providers for your nonprofit:

  • Alignment of culture - If a service provider doesn’t fit with the culture of your nonprofit it could mean butting-heads down the line. Service providers should understand and respect your mission and objectives in order to help you achieve them. This also goes for branding, communication, frequency of interaction, and delivery of objectives and results.
  • Credibility - You’re looking to the service provider as an expert in their field, a resource, and a leader. Be sure they’re equipped for the job but examining case studies (which they should be able to provide) and talk to former and/or current clients. It’s up to the provider to prove to you that they can deliver on the objectives you expect and demand. If they can’t, or you worry about their ability, continue meeting with other providers until you have a high level of confidence.
  • Transparency - Even though they’re working outside of the organization, a service provider should be available to you as needed (within the limitations of the agreed upon contract). Not only should they be available, but they should also be transparent with results, accumulated data, tasks being done on the organization’s behalf, communications, and plans for the future. The relationship between a nonprofit and a service provider should be collaborative, candid, and straightforward.
  • The viability of outsource solutions are dependent on organizational needs and resources of the nonprofit. Specifically, outsourcing can provide e-learning opportunities for stakeholder engagement and employee training, while streamlining human resource tasks like payroll, recruiting, and hiring, and provide quick solutions for technical hang-ups. If you have unmet needs in your organization or you are seeking more cost effective operations, start speaking with providers to see how quickly and easily you may be able to find long-lasting solutions - that time will be well-spent as your organization is able to demonstrate increased mission attainment and exceed donor expectations.

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